Deflating Bush’s China balloon

The Bush Administration is pressuring China to float its currency, the yuan, instead of pegging it to the US dollar. Administration officials argue that the yuan is currently undervalued and is thus hurting the US economy. This week, Alan Greenspan, the US Federal Reserve chairman, said that a rise in the relative value of the yuan would have little effect on US employment, as companies would simply transfer production to another low-wage country. Greenspan is right to say that China should not be blamed for US unemployment, argues this article in the International Herald Tribune. The scapegoating of China by the US is disingenuous, given that a cheaper yuan has allowed US companies to fire workers, move operations to China, and consequently make more money. Just as they blamed Japan for economic problems a dozen years ago, concludes the author, US politicians are pointing fingers at China to shift attention away from their own failed efforts to create jobs and raise living standards. – YaleGlobal